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Pension and Other Benefits

12 Months Ended

Dec. 31, 2016

Compensation and Retirement Disclosure [Abstract]

Pension and Other Benefits Disclosure [Text Block]

Note 18 - Pension and Other Benefits

Defined Benefit Plans

The Company maintains a frozen noncontributory pension plan covering employees of the Company prior to the Merger. The benefits are based on years of service and the employee’s compensation over the prior five-year period. The plan’s benefits are payable in the form of a ten year certain and life annuity. The plan is intended to be a tax-qualified defined benefit plan under Section 401(a) of the Internal Revenue Code. Payments may be made under the Pension Plan once attaining the normal retirement age of 65 and are generally equal to 44% of a participant’s highest average compensation over a 5-year period.

The following table sets forth changes in projected benefit obligation, changes in fair value of plan assets, funded status, and amounts recognized in the consolidated statements of condition for the Company’s pension plans at December 31, 2016 and 2015.

		2016			2015
		(dollars in thousands)
Change in Benefit Obligation:
Projected benefit obligation at beginning of year		$	13,068		$	15,074
Interest cost			514			519
Actuarial (gain) loss			216			(466)
Benefits paid			-			(717)
Settlements			(1,116)			(1,342)
Projected benefit obligation at end of year		$	12,682		$	13,068
Change in Plan Assets:
Fair value of plan assets at beginning year		$	10,287		$	10,414
Actual return on plan assets			831			(296)
Employer contributions			2,000			2,000
Benefits paid			-			(717)
Settlements			(1,116)			(1,114)
Fair value of plan assets at end of year		$	12,002		$	10,287
Funded status		$	(680)		$	(2,781)

The accumulated benefit obligation was $12.7 million and $13.1 million as of the year ended December 31, 2016 and 2015, respectively.

Amounts recognized as a component of accumulated other comprehensive loss as of year-end that have not been recognized as a component of the net periodic pension expense for the plan are presented in the following table. The Company expects to recognize approximately $412,000 of the net actuarial loss reported in the following table as of December 31, 2016 as a component of net periodic pension expense during 2017.

		2016			2015
Net actuarial loss recognized in accumulated other comprehensive income		$	6,272		$	6,677

The net periodic pension expense and other comprehensive income (before tax) for 2016, 2015 and 2014 includes the following:

		2016			2015			2014
		(dollars in thousands)
Interest cost		$	514		$	519		$	576
Expected return on plan assets			(617)			(562)			(596)
Net amortization			407			433			223
Recognized settlement loss			-			650			1
Total net periodic pension expense		$	304		$	1,040		$	204

Total (gain) loss recognized in other comprehensive income			(405)			(918)			1,896
Total recognized in net periodic expense and other comprehensive income (before tax)		$	(101)		$	122		$	2,100

The following table presents the assumptions used to calculate the projected benefit obligation in each of the last three years.

	2016			2015			2014
Discount rate		3.88	%		4.06	%		3.76	%
Rate of compensation increase		N/A			N/A			N/A
Expected long-term rate of return on plan assets		5.50	%		5.50	%		5.50	%

The following information is provided for the year ended December 31:

	2016			2015			2014
	(dollars in thousands)
Weighted average assumptions used to determine net periodic benefit cost for years ended December 31
Discount rate		4.06	%		3.76	%		4.84	%
Expected long-term return on plan assets		5.50	%		5.50	%		5.50	%
Rate of compensation increase		N/A			N/A			N/A

The process of determining the overall expected long-term rate of return on plan assets begins with a review of appropriate investment data, including current yields on fixed income securities, historical investment data, historical plan performance and forecasts of inflation and future total returns for the various asset classes. This data forms the basis for the construction of a best-estimate range of real investment return for each asset class. An average, weighted real-return range is computed reflecting the plan’s expected asset mix, and that range, when combined with an expected inflation range, produces an overall best-estimate expected return range. Specific factors such as the plan’s investment policy, reinvestment risk and investment volatility are taken into consideration during the construction of the best estimate real return range, as well as in the selection of the final return assumption from within the range.

Plan Assets

The general investment policy of the Pension Trust is for the fund to experience growth in assets that will allow the market value to exceed the value of benefit obligations over time. The Company’s pension plan asset allocation as of December 31, 2016 and 2015, target allocation, and expected long-term rate of return by asset are as follows:

		Target Allocation			% of Plan Assets – Year Ended 2016			% of Plan Assets – Year Ended 2015			Weighted Average Expected Long-Term Rate of Return
Equity Securities
Domestic			43%			44%			47%			3.4%
International			7%			8%			15%			0.6%
Debt and/or fixed income securities			49%			47%			36%			1.5%
Cash and other alternative investments, including real estate funds, hedge funds and equity structured notes			1%			1%			2%			0%
Total			100%		$	100%		$	100%		$	5.5%

The fair values of the Company’s pension plan assets at December 31, 2016 and 2015, by asset class, are as follows:

		December 31, 2016				Fair Value Measurements at Reporting Date Using
Asset Class						Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
		(dollars in thousands)
Cash		$	19			$	19			$	-			$	-
Equity securities:
U.S. companies			5,221				5,221				-				-
International companies			1,005				1,005				-				-
Debt and/or fixed income securities			5,689				5,689
Real estate funds			68				68				-				-
Total		$	12,002			$	12,002			$	-			$	-

		December 31, 2015				Fair Value Measurements at Reporting Date Using
Asset Class						Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
		(dollars in thousands)
Cash		$	114			$	114			$	-			$	-
Equity securities:
U.S. companies			4,832				4,832				-				-
International companies			1,584				1,584				-				-
Debt and/or fixed income securities			3,684				3,684
Real estate funds			73				73				-				-
Total		$	10,287			$	10,287			$	-			$	-

Fair Value of Plan Assets

The Company used the following valuation methods and assumptions to estimate the fair value of assets held by the plan (for further information on fair value methods, see Note 22):

Equity securities and real estate funds: The fair values for equity securities and real estate funds are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2).

Debt and fixed income securities: Certain debt securities are valued at the closing price reported in the active market in which the bond is traded (Level 1 inputs). Other debt securities are valued based upon recent bid prices or the average of recent bid and asked prices when available (Level 2 inputs) and, if not available, they are valued through matrix pricing models developed by sources considered by management to be reliable. Matrix pricing, which is a mathematical technique commonly used to price debt securities that are not actively traded, values debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). Discounted cash flows are calculated using spread to swap and LIBOR curves that are updated to incorporate loss severities, volatility, credit spread and optionality. During times when trading is more liquid, broker quotes are used (if available) to validate the model. Rating agency and industry research reports as well as defaults and deferrals on individual securities are reviewed and incorporated into the calculations.

The investment manager is not authorized to purchase, acquire or otherwise hold certain types of market securities (subordinated bonds, real estate investment trusts, limited partnerships, naked puts, naked calls, stock index futures, oil, gas or mineral exploration ventures or unregistered securities) or to employ certain types of market techniques (margin purchases or short sales) or to mortgage, pledge, hypothecate, or in any manner transfer as security for indebtedness, any security owned or held by the Plan.

Cash Flows

Contributions

The Bank does not expect to contribute to its Pension Trust in 2017.

Estimated Future Benefit Payments

The following benefit payments, which reflect expected future service, as appropriate, for the following years are as follows (in thousands):

2017		$	731
2018			720
2019			730
2020			736
2021			748
2022-2026			3,635

401(k) Benefit Plan

The Company maintains a 401(k) employee savings plan to provide for defined contributions which covers substantially all employees of the Company. Beginning with the 2013 Plan Year, the Plan was amended to provide for a 3% non-elective safe harbor contribution for all participants. For 2016, 2015 and 2014, employer contributions amounted to $351,000, $338,000 and $291,000, respectively.